Severance Deals At Academies Criticised

In a report last month the National Audit Office (NAO) criticised “excessive” severance payments made to senior members of teaching staff at the Young People’s Learning Agency (YPLA), an executive non-departmental public body whose accounts are consolidated within the accounts of its sponsor department, the Department for Education (DfE) and is responsible for the funding and support of academies, and refused to sign off their 2011-2012 accounts.

All large severance payments should be approved by the Treasury and in the case of nine academies, 14 such payments were not sanctioned at the time, although the Treasury later provided retrospective approval for them.

The unapproved payments totalled £227,000 but it remains unclear as to how many other special payments were made by academies during that financial year.

The NAO found that 21 per cent of the academies required to prepare audited financial statements by 31 August 2011 had not done so by the December deadline, although all had been received by the end of June 2012. And 54 per cent of the expected Financial Management and Governance Evaluation (FMGE) self-assessment forms were also submitted late.

And due to the unapproved severance payments and a budget overspend of £63m, the accounts of the DfE were also ‘qualified’.

Amyas Morse, comptroller and auditor general of the NAO, said: “I have qualified my audit opinion on the accounts of the Young People’s Learning Agency because the assurance framework was not designed to detect and manage all cases of spending which required approval under Treasury rules.

“For this reason, and for breaching spending limits set down by parliament, I have also qualified my audit opinion on the accounts of the Department for Education.”

The YPLA closed earlier this year and its functions have been taken over by the Education Funding Agency (EFA). NAO said the number of open academies had grown significantly in 2011/12 and expects this expansion to continue.

As an accountant, Gill Freeman specialises within academy finances and charity tax.

Posted in News.